Hoard claimed by man facing tax charges

Press, 21 October 1983, Page 18

Hoard claimed by man facing tax charges

A retired man who migrated to New Zealand in 1951 claimed to have saved a “secret hoard” of about £ 10,000 (about $23,000) from working.

He denied in the District Court at Christchurch yesterday allegations by the Inland Revenue Department that he had understated rental income from properties by more than 127,000 in a five-year period. The defendant, Vasil Frecka, denied five charges of wilfully making false returns of income derived in relation to the income years ending March 31, 1977, through to 1981.

Mr A. M. Mclntosh appeared for the department and Mr D. I. Jones for the defendant. Judge Paterson adjourned the case partheard to today.

Prosecution evidence was given of investigations made of the defendant’s income for the years 1977 to 1981.

From an analysis of accounts and records the defendant was assessed to

have understated his income for the five years by $37,116.82, and to have under-paid tax by $6743.26. The apparently small amount of tax in relation to the amount assessed as undeclared was because of losses totalling about $15,000 incurred by the defendant and carried forward from earlier years.

Of the amount assessed by the department as understated, $27,280 was assessed as being from property rental receipts. The defendant had maintained to tax inspectors that he had a cash hoard. In cross-examination, a former tax inspector, John Andrew Reeves, said the defendant had changed his story about the cash hoard, initially saying it was £ 10,000 and later saying there was nothing. He had also given varying locations of the hoard.

Mr Reeves agreed that from the outset the defendant had stated that he had paid money into his bank account to keep it afloat,

because he had had losses. He said that no calculation had been made on the amount of rentals the defendant would have had to charge on his properties to return $27,000, which the department assessed as undeclared rentals.

Asked if it would surprise him that to receive that income from rents he would have had to charge almost completely double the amount he rented the properties for, Mr Reeves said he could not imagine that.

He agreed that the prosecutions had been brought by the department because the defendant’s explanation that he had subsidised his bank account from savings was not believed.

Mr Jones, opening the defence case, said the defence was that the defendant did have a hoard, and had used some of this to subsidise his bank account when he made losses.

An accountant, Richard John Sissons, said that to have achieved incomes from .rents which the department

assessed, the defendant would have had to charge rentals for each property averaging $36.42 a week in 1977 to $69.46 in 1981.

The defendant said in evidence that, after arriving in New Zealand from Czechoslovakia in 1951, he worked at hydro-electricity schemes and was later a self-em-ployed decorator.

He had accumulated a “hoard” of between £lO,OOO and £ll,OOO by 1963, and the money was kept in a tin in a secret place, he said. He said that keeping savings “secret” was a traditional act by Europeans. He did not keep the money in a bank because he did not know when he would need to have ready access to it.

He changed the money to dollars when decimal currency was introduced in 1967. There was then about $20,000. He started making use of the savings to pay accounts for timber and building materials in a difficult period.